Russian teddy-bear in search of free honey market
Leonid Glazytchev
Logrus International Corporation
Is There the Market at All?
• Russian economy is extremely unhomogeneous
• Maturity levels for different economy sectors are significantly different
• IT is way ahead of the others
Reasons for IT’s Lead
• The most dynamic sector of the economy worldwide
• The most internationally integrated• No rotten roots – young industry• Attracts young and educated people
without political or economic prejudices• Very high level of technical competence
The Two Sides of Russian IT
• Side 1– Speaking the same language– Flexible– Relatively low cost of rank and file labor
• Side 2– Managerial skills usually below expectations– Promises outbalance real capacity/skills– Salaries considerably higher than the country
average. Senior management is convertible, i.e. expensive
Show Us the Data!
• Officially published data is often unreliable
• Most of the data are based on private conversations with top management of major software and hardware distributors, and on Logrus experience
• Internet data supplied by Russian nOn-profit Center for Internet Technologies (ROCIT)
Software Sales
Crisis: QIII’98; currency devalued fourfold
FY
2000
- E
stim
ate
FY
99
- C
ris
is
FY
98
FY
97
1996
, Q
III
1996
, Q
IV
1997
, Q
I 1997
, Q
II
1997
, Q
III
1997
, Q
IV
1998
, Q
I
1998
, Q
II
1998
, Q
III
1998
, Q
IV
1999
, Q
I
1999
, Q
II
1999
, Q
III
1999
, Q
IV
$0m
$50m
$100m
$150m
$200m
$250m
FY97FY98
FY99
FY2000
$0m
$20m
$40m
$60m
Sales by FY
Sales by Quater
Software Sales by Category
ERP19%
Home13%
OS23%
DB & Comm-n
14%
Bus. Desktop
31%
Relatively Small Sales to Home Users
Multimedia Sales
Circulation (Legal)
2000
4000
6000
Average Success Hit
Gross Sales by Year
$20m$20m
$8,5m
1998 1999 2000
Circulation 1000 – 10 000 5 000 – 30 000
Titles per Year 80 300
Average Retail Price $20,00 $2,50
Gross Revenue $3 500 000 $5 000 000
PC Sales & Internet Users
0,55
1
1,6
2,3
0,450,6 0,7
0,0m
0,5m
1,0m
1,5m
2,0m
2,5m
95 96 97 98 99
PC Sales Internet Users Internet Growth
• Decommissioned 0,4-0,6 million PCs
• Purchased New 1,2-1,25 million PCs
Total Expected by 2001: 3,8 million modern PCsTotal Expected by 2004: 5-6 million
(9 million with upgrades)
66% on the Internet
PC Facts
Internet Facts
Population: 146m
36m Intend toBecome Users
4,7 – 5,2mInternet Audience
2,3mRegistered
PC/Net users per 1000: 27/10 (Russia), 116/50 (Mow)
Localization Industry• Didn’t exist 10 years ago
• Mostly very small companies or departments with a single major client
• No reliable revenue statistics
• Continuous turnover of players on the market
• Lack of professionalism on a wide scale
• Approximate gross revenues for FY99: $3 – 4 million (~30% - internal localizations)
• Contradictory and inconsistent data on technical translation market volume
SUMMARY
• S/w and hardware sectors have survived the crisis and give all signs of revival
• Internet is growing rapidly
• For three consecutive years: s/w sales > $100m, computer sales > 1m
• We can expect an upward spiral both in the IT industry and in localization